Are you confused by energy discounts? A guide to saving on your bills
There are so many ads on TV, radio, the internet – even in your Facebook messenger app – pushing massive discounts on power bills. It isn’t uncommon to see discounts as high as 40% in some cases. But you may well think, “How can these people be making money?” Not every discount is equal – and here’s a guide to all the major ones plus one big tip to make sure you really save. More on that later.
What gets discounted?
Power retailers may not discount the entire bill; in fact, they may only discount one aspect of your bill. This might be the power supply charge (a fixed rate per day, a “service fee” of sorts) or the usage charges (how much you use.) If you don’t use much power per day, a discount on usage charges may not be worth it. Be sure you’re clear on what part of your bill your retailer intends to discount.
The major types of discounts
Most discounts you see on TV have big conditions attached to them. They will say something like “You will get X percent off your bill, if…” – and here are the major “ifs” you’ll encounter.
A pay on time discount will take off a percentage of your bill if you pay before a certain due date. This might be ideal for people who direct debit their bills, but if you are self-employed or unsure about big spikes in power use (around summer for example) you may want to find a different plan with an overall lower tariff. Some retailers also offer this as a direct debit discount.
A bundling discount might give you a further percentage off your total bill if you sign up your gas account with the same retailer.
Some retailers also offer a “paperless” or “green” discount if you opt to get your bill online instead of through the mail.
Be wary of benefit periods, fees, and expiry dates
Almost all retailers will only offer their benefits or discounts for a set period. These usually expire after 12 months – though 24-month offers are becoming common. Many retailers hope you don’t compare and change your plan so you stay on the same offer without the discount.
Other ways retailers make money is to charge big fees such as late payment fees, a disconnection or reconnection fee, an exit fee, and an account establishment fee. Retailers cannot charge massive exit fees by law, but other fees may apply in your case.
Our big tip: how to find real savings in real terms
Many energy comparison sites wow you with massive discounts that hide the real cost from month-to-month. A new site, EConnex, gives you all the major retail plans in your area and shows you how much you could save in real dollar terms. All you need is a recent bill and about five minutes of your time. You can sign up online (no annoying callbacks) and be done and dusted within a commercial break. It’s easy and you could save a lot. Check EConnex here and see how much you could save.